Pact is an AMM focused on providing users with cheaper swap fees and offering liquidity providers 100% of the fees they accumulate and 1% taker fees on certain LPs – a truly unique value prop across the Algorand ecosystem and the main reason they call themselves the “home of liquidity” on Algorand.
Pact’s current suite features a swap, stableswap, zapper, liquidity pools (boosted by Aeneas rewards), and enhanced analytics. In the future, they plan to release an auto-router, farming features, and protocol governance.
In addition to its generous fee structure and comprehensive suite of features, Pact has one of the slickest UIs and best UXs across Algorand. The protocol allows users to see how much of each token they have in each pool at any given time and provides an easy way to track rewards per pool.
And its simple and automatic Aeneas rewards distribution makes earning ALGO fairly straightforward and frictionless. More on this below.
Getting Started
To get started, navigate to Pact and connect your wallet using the button in the upper right-hand corner:
How to Swap
You can swap assets within the “Swap” tab. Pact’s DEX is broken out into three components:
A basic Automated Market Maker (AMM) which handles a majority of use cases
A stableswap which facilitates swaps between pegged assets (i.e., gALGO and stablecoins) with minimal slippage
A Smart Router that achieves better pricing by splitting trades across multiple pools (up to 3)
Gov Tip: Learn more about how Pact’s stableswap and Smart Router work in their official documentation.
To begin swapping, navigate to the “Swap” tab and select the assets you’d like to trade. You can leverage the “Select a token” or “Search Swaps” buttons depending on your preference:
You can use the double arrows icon to modify the swap:
Input the swap amount manually or use the sliding scale and “Min” and “Max” buttons based on your preference.
Use the drop-down menu to view the Smart Router path:
Gov Tip: The Stableswap indicator below will tell you if your swap is optimized for pegged assets.
When ready, select “Swap” and finalize the transaction by signing it with your wallet.
To adjust your slippage tolerance, use the gear icon:
How to Zap
Zapping is a quality-of-life feature that enables one-click access to liquidity pool tokens (LPTs). Instead of swapping two assets into equal parts before pooling them together, Pact’s “Zap” generates a group transaction through composability to swap your assets into equal parts and then pool them together.
This allows you to bypass both the “Swap” and “Pool” tabs and saves you time.
Navigate to the “Zap” tab and use the drop-down menus to select the asset you want to zap into a liquidity pool (LP).
Select the asset you want to zap and then choose the LP. Input the amount to zap and select “Confirm” to finalize the transaction:
How to Provide, Remove, & Manage Liquidity
You can provide, remove, and manage liquidity from the “Pool" and “Your Liquidity” tabs. Liquidity providers (LPers) earn trading fees on all swaps made in pools. As mentioned above, Pact provides 1% taker fees on certain pools - a unique proposition in the Algorand ecosystem.
Gov Tip: Learn more about trading fees on Pact here.
To provide liquidity, navigate to the “Pool Overview” tab and use the “+” icon to the LP of your choice:
Manually input the amount of each asset to provide to the LP or use the “Max” button:
Select “Confirm” and finalize the transaction by signing it with your wallet.
Alternatively, use the lightning bolt icon to zap into the pool:
Gov Tip: You can also use the swap icon on the right of the zap icon if you prefer.
The final way to provide liquidity is to leverage the “Add Liquidity” tab, and select “Search Pools” or “Select a token” to choose your pairing:
Back on the “Pool Overview” tab, you can customize your research by leveraging the “Detailed Stats” slider or “Search Pools” button:
To review, remove, or modify liquidity, navigate to the “Your Liquidity” tab. This tab keeps track of your positions and accrued rewards while allowing you to modify your positions as needed.
Gov Tip: Pact automatically distributes rewards to your wallet, so you don’t need to claim them manually!
Use the “+” icon to add liquidity, the “-” icon to remove liquidity, and the swap icon to trade the pair.
When selecting the “-” icon, you can review your current position to gauge any potential impermanent loss incurred since entering the pool:
To remove liquidity, input the amount manually or using the sliding scale:
When you’re ready, select “Remove liquidity” and confirm the transaction by signing it with your wallet.
With the addition of LPTs to Governance for period #5, you can leverage the “Gov” buttons to commit to Governance:
This will take you directly to the Algorand Foundation’s Governance Portal.
Miscellaneous
Pact offers a wide range of stats on its “Analytics” tab, including the top pools, tokens, and transactions:
Select the “Add”, “Zap”, and “Swap” buttons as a shortcut to those respective UIs. Select a specific pool to view its advanced analytics or to “Add”, “Zap”, or “Swap” into it.
Select the three dots icon from the menu bar to review Pact’s official documentation, FAQs, and social handles:
Review your account by selecting your wallet in the upper righthand corner to review your assets, LPTs, recent transactions, and to disconnect from the dApp:
And that’s it, gov! You’re now a Pact pro.
We recommend you start with their official documentation if you want more information on how to use the protocol.
Disclaimer: This isn’t financial advice! As we say in crypto, don’t trust – VERIFY! Do your own research to determine if Pact is right for you and don’t ever invest more than you’re willing to lose.
Like any DeFi project, Pact comes with risks:
Smart contract failure: Despite undergoing a full audit and rigorous internal quality assurance, there is a chance of smart contract failure.
Oracle Risk: There is the risk that the oracles used by the Pact provide incorrect or stale data.
Slippage: Slippage occurs when a trade settles for an average price that is different than what was initially requested, and it often happens when there's not enough liquidity to complete your order or the market is volatile. This leads to the final order price changing.
Impermanent Loss: When you provide liquidity to a LP and the price of your deposited assets changes compared to when you deposited them, you can experience impermanent loss. The LP is programmed to maintain a constant value between two tokens, so arbitrage traders will use the pool to swap the two tokens until the necessary constant value is achieved.